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ONE reported a record first-quarter profit of US$5.499 billion for FY2022, up 87.04% from its US$2.94 billion profit in the same period last year
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The Singapore-headquartered ocean liner gained from steady global cargo demand in April-June despite the impact of Shanghai’s lockdown and the Ukraine crisis
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ONE’s profit driven up by higher rates amid supply chain disruptions due to port congestion, particularly on the North American east coast
Global container carrier Ocean Network Express (ONE) reported record first-quarter profit of US$5.499 billion for FY2022, up 87.04% year-on-year, as steady cargo demand worldwide drove its earnings up despite the COVID-19 pandemic and Russia’s invasion of Ukraine.
During the same period last year, ONE posted net profit of US$2.94 billion in an environment where the global economy faced only the uncertainty brought on by COVID-19.
The impact of pandemic-related lockdowns in Shanghai and the Ukraine crisis that disrupted supply chains sent container rates rocketing to record highs, buoying up earnings of ocean liners including ONE.
At the end of its FY2022 first quarter in June, the Singapore-headquartered company saw net profit almost doubling from US$2.94 billion in the same period last year.
Liftings dropped slightly from the same period last year. While vessel operating costs rose, bunker consumption fell due to fewer ships operating and port congestion. As a result, operating costs remained similar to the level in the same period last year.
Freight increased significantly. Although cost-saving initiatives progressed, additional costs were incurred due to global inflation and shoreside/inland congestion.
Bunker price further increased as western sanctions on Russian oil exports tightened supply. Overhead costs such as agency fees and system costs also increased.
Despite the challenging operating environment, global cargo demand remained firm. Asia-North America market volume in April and May increased by about 4% y-o-y.
Asia-Europe market volume in April and May contracted by approximately 7% y-o-y as the global economy began to feel the impact of the Shanghai lockdown and the Ukraine crisis.
During the period, the congestion eased in Los Angeles and Long Beach, but worsened at other North American east coast ports such as Vancouver, New York and Savannah. Inland congestion is deteriorating again while congestion continues in European ports, such as in Hamburg.
In China, particularly in Shanghai, Shenzhen and other major ports, re-occurring lockdowns have caused trucker shortages and yard congestion. Although the lockdown was lifted in June, subsequent strict measures have made recovery slow.
ONE noted that the International Longshore and Warehouse Union’s current agreement expired at the end of June, but discussions are ongoing.
For full-year FY2022, ONE expects that the excessive strain on the entire global supply chain and the resulting operational bottlenecks caused mainly by the spread of COVID-19 will eventually be resolved.
The company said the move towards normalization will be gradual. Currently, it is difficult to predict exactly when the situation will return to normal due to the wide range of effects.
ONE said it it has become more difficult to forecast the overall business environment in the face of increasing uncertainties such as Russia’s war on Ukraine, the impact of China’s zero COVID-19 policy, and the ILWU labor negotiations.
In these circumstances, it is extremely difficult to announce a reasonable business forecast for the current financial year, ONE said, so the forecasts for FY2022 are yet to be finalized.
